Washington’s Solution to Corruption: The Investigation Placebo

Whenever there is a national scandal, assassination, security breach, news of corporate corruption, or financial debacle, the go-to remedy for these societal and economic shocks is to conduct an investigation.

This is the government’s typical reaction to events it let happen or did not want to, or could not control.

So, it is no surprise that after a two-year investigation by former Special Counsel Robert Mueller into Trump and his campaign’s probable criminal misconduct into how Russia aided his election, there are still more investigations being conducted.

While much of the information regarding these investigations are secret, we know Mueller’s team referred 14 investigations to other U.S. attorney’s offices around the country. The issues of who, what, and the statuses of these offshoot investigations are all mysteries, but reports say they focus on Trump’s business associates and attorneys in previous business activities going back decades.

The bigger unknown questions and the one many average Americans are most concerned about are: When will the investigations be concluded? Why are they taking so long? What punishments, if any, will be imposed on the guilty parties?

While it’s true that after almost two years, Mueller’s investigation brought 199 criminal charges, 37 indictments or guilty pleas, and five prison sentences to Trump’s cohorts. But Trump himself or his family have, so far, evaded indictments. Instead, all the public has are notifications of more investigations; nothing else.

But if the past record of U.S. Justice Department investigations of white-collar and public corruption are any indication, these investigations will fade from public view, grind to a halt or else go public and be reversed through a slow and expensive appellate process that will allow most of these possible defendants to bask in the sun for the rest of their lives.

The Federal Investigations Industry

Federal government investigations are like that, especially when they focus on high profile events, corporations, and big names. For example, the public is still waiting for the release of the complete Warren Commission, which investigated the John F. Kennedy assassination in 1962.

Before it was going to be released in April 2018, the Trump administration delayed the release of more files on the Kennedy assassination citing “identifiable national security, law enforcement, and foreign affairs concerns,” according to a White House memo. Trump’s administration said it (or hopefully the new president) would release more documents on Oct. 26, 2021.

This delay was so unexpected that Sen. Chuck Grassley, (R-Iowa), then chairman of the Senate Judiciary Committee, uncharacteristically called the latest delay “ridiculous,” and tweeted, “YeGods u had fifty yrs NOW CIA WANTS FURTHER COVERUP/POTUS STOP.” The State of Texas, Secret Service, State Department, FBI, and CIA also conducted investigations into the Kennedy Assassination.

The Investigation Industry

Since 1792, the U.S. Senate and other political bodies have sought to determine motives, reasons and the facts about why a national event happened. For example, after the surprise attack on Pearl Harbor, no less than six investigations were conducted to determine why the U.S. forces were unprepared and each one reached a separate conclusion, as cited in the book, Pearl Harbor: FDR Leads the Nation to War, by Steven Gillon.

After the 1987 stock market crash, when the S&P 500 stock index fell by 23% in a single day, Congressional and independent investigators produced no less than 77 separate studies, some chaired by Wall Street’s most prominent names, academics, and regulators, to find the culprits, causes and remedies for the crash. No single reason was ever found for why the crash happened.

More recently, Facebook is now being investigated by the Federal Trade Commission, Department of Housing and Urban Development, Securities and Exchange Commission, the United States attorney’s office for the Eastern District of New York and Justice Department. No dates have been set for when the investigations will be concluded.

And at the individual level, EPA Administrator Scott Pruitt, considered “the most corrupt administrator in the history of the EPA” by the Friends of the Earth, said on its web site that “since taking office in 2017, he (Pruitt) has spent hundreds of thousands of taxpayer dollars on luxury travel, absurd security measures and countless expensive perks for himself and his friends.”

There are currently 15 federal investigations reviewing his conduct in office, including one where the Government Accountability Office decisively concluded that his actions violated two U.S. laws.

Searching for Trust?

Investigations are a great way to spend time in government, academic and think-tank industry circles. They frequently involve all elements of Congress, lawyers, academics, law enforcement officials, local elected officials, and witnesses, many of whom are being paid. It is so great that there is a U.S. House Select Committee on Assassinations that was formed to investigate the Kennedy and Dr. Martin Luther King assassinations.

Federal investigations date back to the start of the nation. Framers of the nation gave authority to Congress to investigate as “an implied constitutional power” and the Senate wasted little time with the first investigation starting in 1792.

According to the U.S. Senate, “James Madison anticipated the significance of congressional inquiry in Federalist 51 when he urged: “In framing a government which is to be administered by men over men. . .you must first enable the government to control the governed, and in the next place oblige it to control itself.”

The Senate also said: “Congress has exercised its investigative responsibility since the earliest days of the republic. Today congressional oversight enables House and Senate members to serve as the eyes and ears of the American public.”

In its history of investigations, the Senate has conducted a variety of investigations, including ones into the 1859-1860 Select Committee to Inquire into the Facts of the Recent Invasion and Seizure of the United States Armory at Harper’s Ferry; railroad and water interstate transportation regulation (1885); investigations of alleged lobbying activities in Washington, D.C., and elsewhere (1913-1917); an investigation of Wall Street banking and stock exchange practice (1932-1934),; an investigation of public utility company lobbyists (1935-1938); and the investigation of influence peddling in defense contracts (1949).

The list of investigations conducted by the Senate was mostly multi-year events, some of which (mostly pre-1933) produced significant legislation, such as the Interstate Commerce Act., Securities Act of 1933, the Banking Act of 1933, the Securities Exchange Act of 1934, and the Air Mail Act of 1933.

Conversely, many investigations did not produce any prescriptive legislation but served as public education and political events. In today’s Trump-dominated world, it will be difficult to track the 14 investigations focused on Trump’s family businesses, advisers and associate’s activities, what they found and if they will ever be completed.

It is also not clear what the Southern District of New York in Manhattan, which reportedly was assigned many of Mueller’s leads, is doing. According to the New York Times, “The precise number of federal investigations around the country that have grown out of the special counsel’s work remains unknown because such inquiries are conducted in secret. But the special counsel’s office farmed out strands of its inquiry to at least three other United States attorneys’ offices, including in Brooklyn, the District of Columbia and the Eastern District of Virginia.”

Scientific-Political Investigations

Investigations connote impartiality and this may be a reason why they are taken seriously and have become commonplace. But investigations are conducted by humans, so there is an inherent problem of prejudice, self-interest, corruption, incompetence and shaping results to a pre-determined conclusion. There are many examples of this from investigations that require scientific evidence, especially product liability lawsuits. It is this group that provides the most duplicitous results and evidence of tainted research, intentional obfuscation, and blatant lying. These cases have involved General Motors, Dow Corning, Phillip Morris, Owens Corning, Johnson & Johnson, and Koch Industries.

Investigations into the results of Agent Orange, cigarette use, asbestos, oil refinery chemicals, coal dust, baby powder and their links to cancer all involved major industry investigations by paid scientists that produced results exonerating their industrial sponsors. One of the best examples of the non-U.S. political manipulation of scientific evidence was broadcast in the drama, “Chernobyl,” on Netflix.

This drama shows the inherent conflict of interest between the Soviet Union’s coverup of a design flaw in its light water graphite reactor (RBMK) series that made the emergency shut-off process ineffective. When the nuclear explosion happened, the official Soviet response was to blame it on “operator error” a true statement, but it intentionally ignored the design flaw. It was only after a few intrepid scientists exposed the flaw that the Soviet Union corrected the problem at its other facilities. Later, ex-Soviet Premier Michael Gorbachev said the Chernobyl disaster and the truthful results that were unexpectedly released in its investigation were the reason why for the collapse of the Soviet Union.

Back in the USA, the Justice Department has earned a terrible reputation for prosecuting corporate and to a lesser extent, public corruption. As described in the book, The Chickenshit Club, by Jesse Eisinger, the Justice Department and its numerous offices nationwide have dropped the ball and failed to bring cases against corporate and white-collar law violators for reasons related to external politics, internal infighting, poor leadership, inexperienced lawyers, or the fear that they will lose in court.

As described in the book, these failures include cases against Enron, Walmart, Toyota, General Motors, British Petroleum for the Deepwater Horizon environmental disaster, Goldman Sachs, JP Morgan and Bank of America. Other firms not included in the book also play this evasion game. This includes many firms described in Jane Mayer’s 2016 book, Dark Money, especially companies owned by the Koch Brothers and other right-wing families (including Richard Mellon Scaife, the Bradley brothers) who violate pollution and labor laws with impunity and then entangle the government in appellate courts for years.

When corporate cases are brought today, the Justice Department has replaced deferred prosecution agreements with corporations agreeing to pay fines and settlements, with no individual executives being held responsible. This is because defenders of corporate crimes contend that corporate decision making is so diffused that no identifiable group of executives can be held responsible. Keep that in mind the next time a CEO takes credit for a company milestone or major achievement. They want the glory on the upside and none of the responsibility on the downside.

When banks involved in the 2008 recession did pay their fines, they also signed statements of fact that eliminated any specifics about who, what and when the criminal acts happened. Or, more accurately, the statements did not even call them “criminal acts.”

Then there are the political, human decisions by Justice Department officials about whether they should even bring charges against corporations. In the case of the 2008 real estate and mortgage fraud

Always the corporate lawyer

crisis that caused the 200 recession, Obama’s Attorney General Eric Holder, a corporate lawyer working for the politically connected firm of Covington and Burling before and after he served as AG, said he was not interested in prosecuting those responsible.

Worse, he worked with heads of key prosecution departments who had little experience in complex criminal cases, Eisinger writes. They were also dogged by Obama’s political appointees who wanted to micro-manage the cases from outside. Then, there is also the omnipresent temptation that federal prosecutors will enter the revolving door to work for better salaries at private, corporate defense firms. This can act to keep a lid on prosecutorial enthusiasm.

Even though the mortgage fraud involving the nation’s largest investment firms was historic, the Justice Department failed to coordinate its investigations. At one time, it was working with 26 federal agencies and departments, plus state and local officials, as well as Justice Department offices nationwide. As Eisinger writes, “after a promising start, the Financial Fraud Enforcement Task Force fizzled.” He then concluded that “any national push to combat the financial crisis died.”

Mueller’s Toothless Report

Sadly, the Mueller Report was not the document many people expected. It certainly did not have the impact of the Chernobyl trial or even the drama screen in the climactic military trial scene from the 1992 film “A Few Good Men” when Col. Nathan R. Jessep (played by Jack Nicolson) admonishes Lt. Daniel Kaffee (Tom Cruise) when he says “You can’t handle the truth.”

Nicholson’s character may be right. Many Americans cannot handle the truth, while millions of others wanted to hear it from Mueller. But to the average citizen, Mueller’s long-awaited report delivered a marshmallow conclusion. Either Mueller pulled his punches due to Justice Department rules, his personal ethical standards, or he hid behind legalese to avoid making a specific claim.

But whether the strands of these investigations come together or not, investigations take on a life of their own. The U.S. House of Representatives, which conducted the investigation into the Kennedy (the largest criminal investigation in U.S. history) and King assassinations, recommended in a 1978 report, that it “analyze whether a further official investigation is warranted in either case.” It seems some investigations never end.

This may also be the case with the Trump family and its businesses. Trump has evaded legal accountability his whole career and that is an indictment of entire legal and political systems in New York and Washington. That is the real disgrace of the Trump administration. It is a systemic flaw no investigations will fix. History shows it is very rare for political systems to repair themselves without fundamental change. That is what the 2020 election is all about.

Chuck Epstein

Chuck Epstein has managed marketing communications and public relations departments for major global financial institutions and participated in the launch of industry-changing financial products. He also has written by-lined articles for over 50 publications, five books and served as editor and publisher of nation’s first newsletter on the topic of using the PC for personal investing and trading. (“Investing Online, 1994-1999). He also is a marketing consultant, writer and speaker on topics related to investor protection and opportunities in the very dynamic cannabis industry.

He has held senior-level marketing, PR and communications positions at the New York Futures Exchange, Chicago Mercantile Exchange, Lind-Waldock, Zacks Investment Research, Russell Investments and Principal Financial.

He has won national awards from the Mutual Fund Education Alliance (MFEA) and his web site, www.mutualfundreform.com, was named best small blog in 2009 by the Society of American Business Editors and Writers (SABEW).

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